Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nucleus Software Exports Ltd (BOM:531209, Financial) reported a quarter-on-quarter increase in consolidated revenue, reaching INR202.2 crores.
- The company is realizing benefits from its strategic initiative, Hoshin Country, which is based on lean principles aimed at improving operational efficiencies.
- There was a notable increase in revenue from projects and services, rising to INR30.8 crore from INR27.4 crore quarter-on-quarter.
- The company has a strong pipeline that is in advanced stages, indicating potential future growth.
- Nucleus Software Exports Ltd (BOM:531209) has a diversified pipeline spread across multiple geographies, reducing dependency on any single market.
Negative Points
- The order book position has decreased from INR813.4 crore to INR720.5 crore, indicating a slowdown in new orders.
- Net profit has decreased year-on-year from INR44.6 crore to INR33.1 crore, reflecting challenges in maintaining profitability.
- The company has not added any new clients in the current quarter, which could impact future growth prospects.
- There is an increase in the cost of delivery, which now stands at 71.4% of revenue, up from 61.6% year-on-year.
- Decision-making cycles for clients have lengthened, with some taking up to two years, impacting the conversion of the sales pipeline into actual revenue.
Q & A Highlights
Q: Can you elaborate on the strategic initiative mentioned in the opening comments and its expected impact on the order book?
A: The strategic initiative, called Hoshin Country, is based on lean principles aimed at improving operational efficiencies and customer experience. It is expected to result in long-term profitability and better order conversion, although the impacts are not immediate. (Respondent: CEO)
Q: What is causing the elongation in sales cycles, and how does it affect your growth?
A: The sales cycle has increased by 30% to 50% due to more competition and cautious decision-making by clients. This delay is impacting order conversion, but the pipeline remains strong. (Respondent: CEO)
Q: Are there any significant headwinds affecting your growth, given the stagnant revenue over recent quarters?
A: The primary barrier is the extended decision-making time by clients, which has increased from two to three quarters to six to eight quarters. This cautious approach is affecting growth. (Respondent: COO)
Q: How is the company addressing the increase in operating expenses, and what is the target margin?
A: The increase in operating expenses is mainly due to investments in employees and technology. The company aims to return to the margins achieved last year by optimizing costs and increasing sales. (Respondent: CFO)
Q: What is the strategy for international expansion, and which geographies are you focusing on?
A: The company is focusing on 17 countries, aiming to play a dominant role in 30% to 40% of these markets. Key regions include Southeast Asia, the Middle East, and Australia, where there is good traction. (Respondent: Chief Marketing Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
